Airbus Buys Salzburg Bank to Aid Sales From Jets to Choppers

A woman holding a mobile phone walks past the Airbus Group NV logo displayed at the company's booth during the Singapore Airshow held at the Changi Exhibition Centre in Singapore. Photographer: Brent Lewin/Bloomberg

Feb. 14 (Bloomberg) -- Airbus Group NV plans to create an
in-house bank by taking over a regional lender as the world’s
second-largest planemaker follows companies from Daimler AG to
Siemens AG in providing financial services for customers.

Airbus will purchase Salzburg Muenchen Bank from the
Raiffeisenverband Salzburg cooperative for an undisclosed sum,
the Toulouse, France-based manufacturer said in a statement
today. The planemaker is seeking to close the deal “as early as
possible” this year, pending German regulatory approvals.

Airbus, which has an order book of more than 5,500
aircraft, joins other industrial companies including its engine
supplier General Electric Co. in having a banking affiliate to
aid customer purchases. Some airlines struggled to raise funding
in recent years as bank lending contracted in the wake of the
financial crisis that began in 2008.

“In the coming years the whole group can benefit through
increased financing flexibility,” Chief Financial Officer
Harald Wilhelm said. “Salzburg Muenchen Bank provides us with a
good platform to launch our company bank project.”

Finance Flexibility

A banking license would hand Airbus direct access to
European Central Bank money supply. The company, previously
called European Aeronautic, Defence & Space Co., had explored
the project of setting up a bank for more than a year.

“The main purpose is to increase finance flexibility,
facilitate financing of non-controlled joint ventures and offer
attractive conditions based on the Airbus Group rating,” the
company said. The company is rated A2 by Moody’s Investors
Service and the equivalent A by Standard & Poor’s, the sixth-highest investment-grade rating on a 10-step scale.

The new organization will be renamed Airbus Group Bank, and
Airbus said it will gradually serve all units, which include the
helicopter and defense subsidiaries. Airbus added that while it
will gain the capability to tap ECB funds, it has “no need” to
do so.

Airbus has deepened ties with financial institutions as it
seeks to insulate itself from imbalances between the dollar, in
which commercial jet purchases are principally denominated, and
the euro, its primary cost base. The planemaker has sought more
sales in euros to cut back on hedging contracts that protect
revenue when translated back into its home currency.

Conservative Shop

The company opted to buy Salzburg Muenchen Bank, which has
about 350 million euros ($478 million) in total assets and 50
employees, because it is “a conservative and well-managed
existing banking platform,” the company said.

Shares in the company rose as much as 1.3 percent and were
trading 0.65 cents higher at 52.78 euros as of 11:17 a.m. in
Paris, valuing Airbus at 41 billion euros.

The banking arm could also provide Airbus flexibility in
aiding suppliers, some of whom have struggled to finance
investments needed to keep pace as the planemaker increases
output to record levels. Airbus acquired Germany’s PFW Aerospace
in 2011 to keep the parts-maker in business.